EU Restricts Chinese Inverters In The Name Of Safety

On May 1, 2025, Lithuania officially implemented the amendment to the Electricity Law, requiring that new photovoltaic projects above 100kW must use inverters that meet national safety standards, and existing projects must be transformed before May 2026. This policy is not an isolated incident, but an important part of the EU's energy strategy reconstruction:

Awakening of energy sovereignty awareness

After the Russian-Ukrainian conflict, the EU has a deep understanding of the vulnerability of the energy supply chain. According to data from the European Solar Manufacturing Council (ESMC), Chinese inverters account for 70% of the European market share, and companies such as Huawei and Sungrow control 168GW of photovoltaic remote access capacity, equivalent to the output of 200 nuclear power plants. This high degree of dependence is regarded by the EU as a risk of "energy colonization". Lithuanian MPs bluntly said: "When Chinese companies hold the digital key to the European power grid, our energy sovereignty will be gone."

Industrial protectionism is on the rise

The EU's "Net Zero Industrial Act" sets a goal of 40% of local photovoltaic production capacity by 2030, but the current local inverter production capacity is less than 5%. German Economy Minister Habeck admitted: "Restricting Chinese products will cause the cost of the European photovoltaic market to soar and even cause corporate bankruptcy." However, under the lobbying of local industries such as ESMC, the EU still chose to promote trade protection in the name of "security" in an attempt to win a window of transformation for local companies.

Construction of digital security narrative

ESMC cited a DNV report saying that Chinese inverters have "unregulated remote control capabilities" that may cause the risk of power grid paralysis. Although Chinese companies generally pass third-party certifications such as TÜV Rheinland, and the vulnerabilities disclosed by the Dutch ethical hacker organization DIVD have been fixed, the EU still bundles Chinese inverters with 5G equipment and exaggerates the "digital infrastructure threat theory." This narrative strategy forms a strategic echo with the US's technological containment of China.

The duality of technical standards

The "Inverter Security Toolbox" launched by the EU includes:

Risk assessment process: requiring companies to disclose supply chain information, source code and remote control protocols

Functional restrictions: prohibiting "high-risk" suppliers from accessing the real-time control system of the power grid

Certification barriers: adding cybersecurity certification (such as EN 50178), and extending the test cycle by 3-6 months.

These standards are neutral on the surface, but they are actually aimed at Chinese companies. For example, the "digital twin" function of Huawei's smart string inverter was identified as a "potential security vulnerability", while similar technology of Germany's SMA Solar was exempted.

Severe shocks in the market structure

Short-term pain: China's inverter market share in Europe may drop from 70% to 40%, and companies such as Huawei and Sungrow are facing pressure on equipment replacement and compliance costs. It is estimated that the transformation of existing projects in Lithuania alone will require an investment of 230 million euros.

Price transmission: The price of local inverters in Europe is 30%-50% higher than that of Chinese products. Combined with carbon tariffs, the levelized cost of electricity (LCOE) of photovoltaic power in Europe will rise by 0.03-0.05 euros/kWh.

Supply chain reconstruction: Chinese companies are accelerating the transfer of production capacity to Indonesia and Mexico. Longi's 5GW factory in Indonesia has been put into production, and JinkoSolar has laid out new production capacity in Mexico. Korean companies (such as Hanwha Solar Energy) have become the main beneficiaries of the US market because they are not included in the sanctions list.

Technical compliance breakthrough

Security certification upgrade: Sungrow and Germany's TÜV SÜD cooperated to develop a "zero trust" architecture and passed the ISO/IEC 27001 certification; Huawei launched the "Inverter Security White Paper" and disclosed 12 core technical parameters.

Localized R&D: Sineng Electric has set up a European R&D center in the Netherlands to optimize string inverters for the characteristics of the European power grid; Chint Power launched a 25kW model suitable for European rooftop photovoltaics and passed the CE certification.

Market strategy adjustment

Emerging market development: In the first quarter of 2025, China exported 1.32GW of photovoltaic modules to Africa (year-on-year + 33%), with South Africa accounting for 31%; exports to the Middle East were 2.4GW (year-on-year -22%), with Saudi Arabia accounting for 34%.

Energy storage synergy development: Sungrow Energy Storage shipped 17GWh in the first three quarters (year-on-year +144%), and Huawei released the "photovoltaic storage integration" solution to deeply integrate inverters with energy storage systems.

Legal and diplomatic countermeasures.

WTO litigation: China Chamber of Commerce for Import and Export of Machinery and Electronic Products intends to file a complaint based on the Agreement on Technical Barriers to Trade (TBT), accusing the EU of violating the principle of non-discrimination.

Technology alliance construction: China Photovoltaic Industry Association and SolarPower Europe have established a dialogue mechanism to promote mutual recognition of China-EU cybersecurity certification.

Differentiation of technology routes

European localization dilemma: The EU plans to invest 5 billion euros to support the local inverter industry through the "Important Projects of Common Interest" (IPCEI) mechanism, but faces problems such as shortage of skilled workers and supply chain disruption. Germany's SMA Solar laid off 1,100 employees, and SolarEdge closed its energy storage department.

China's technology iteration: After the third phase of TBEA's Xi'an Industrial Park is put into production, the inverter production capacity will reach 50GW, and international revenue will account for more than 40%; GCL-Polytechnics released a 2.8 square meter perovskite module with an efficiency of 16.1%.

Geopolitical game

US linkage: The United States imposed a tariff of up to 3521% on four Southeast Asian countries, forming an "East-West pinch" with EU policies. Chinese companies transferred production capacity to Indonesia and Laos, and it is expected that Indonesia's battery cell production capacity will surge to 20GW in 2025.

Middle East hub status: Saudi Arabia's Al Shubach 2.6GW power station uses N-type bifacial modules, with an annual power generation of more than 8 billion kWh; the UAE PV3 Ajiban 1.5GW project is equipped with a high-temperature resistant and anti-corrosion tracking system.

Industry Standard Reconstruction

Cybersecurity has become a new battlefield: the EU promotes the mandatory EN 50178 standard, while China leads the formulation of the national standard "Technical Requirements for Information Security of Photovoltaic Inverters" to compete for the right to speak in the industry.

Green certification system: Trina Solar's Spanish zero-carbon photovoltaic park has passed the EU carbon tariff certification, and the carbon footprint of the entire chain has been reduced to 350kg CO₂/kW; Longi's hydrogen energy electrolyzer won the German "Global Outstanding Project" Award, promoting the integration of "photovoltaic + green hydrogen".

Short-term risks

Rising supply chain costs: US tariffs have led to a 12% reduction in global installed capacity, and EU carbon tariffs have increased cost pressure on Chinese companies. Polysilicon inventory rose to 35,000 tons, and the industry entered the stage of "expanding high-quality production capacity + clearing out backward production capacity".

Normalization of technical barriers: The EU plans to implement the "Digital Product Law" in 2026, requiring inverters to have built-in "digital identity", further raising the entry threshold.

Long-term Opportunities

The rise of emerging markets: Global photovoltaic installed capacity is expected to exceed 600GW in 2030, and the installed capacity in the Middle East and Africa will increase from 5% to 15%, forming a "local manufacturing + regional distribution" model.

Technology integration and innovation: The efficiency of perovskite/crystalline silicon stacking technology reaches 35%, driving the cost of electricity down to US$0.03/kWh; AI algorithms and energy digitalization have become industry standards.

Strategic inspiration

At the enterprise level: It is necessary to build a three-dimensional competitiveness of "technical compliance + localization + ecological cooperation", such as Huawei's cooperation with Germany's E.ON Group to develop smart microgrids.

Policy level: China and Europe should promote mutual recognition of technical standards and oppose unilateralism; increase investment in emerging markets and build a diversified supply chain.

Conclusion: Find a New Balance In The Game

The EU's restriction on Chinese inverters in the name of "security" is essentially a microcosm of the contradiction between globalization and localization. This game not only exposes the anxiety of the EU's energy transition, but also tests the resilience of Chinese photovoltaic companies.

In the future, industry competition will shift from pure cost advantages to a comprehensive contest of technical standards, ecosystems and geopolitics. Only through open cooperation and independent innovation can we achieve a win-win situation for all parties in the global energy transformation.